Medical debt

Percentages of persons in families with selected financial burdens of medical care: United States, January–June 2011. From National Health Interview Survey.

Medical debt is an especially notable phenomenon in the United States. According to a 2019 poll from the Pew Research center, American citizens are much more worried about health care issues as a top public matter and concern, especially medical expenses, rather than the economy and terrorism.[2]

In less developed nations those on low income in need of treatment will often avail themselves of whatever help they can from either the state or NGOs without going into debt, and in most developed countries public coverage of healthcare costs are comprehensive. But in the US, even when the patient has insurance coverage, including coverage under the Patient Protection and Affordable Care Act of 2010, considerable medical costs remain the patient's responsibility. Consequently, medical debt has been found by a 2009 study to be the primary cause of personal bankruptcy.[3][4] One of the surveys that has been conducted by the Kaiser Family Foundation showed that the amount of debt incurred by individuals for health care costs is likely to cause personal bankruptcy. The study, which involved adults with employer-sponsored insurance, found that while 20% of those surveyed have been approached by agencies, almost 9% of people declared their bankruptcy due to the health expenses.[5]

A 2007 survey found about 70 million Americans either have difficulty paying for medical treatment or have medical debt.[6] According to research done in 2019, especially adults who are between 18–64 years and those lacking health insurance coverage are familiar with medical financial hardship in the US.[7] Studies have found people are most likely to accumulate large medical debts when they do not have health insurance to cover the costs of necessary medications, treatments, or procedures—in 2009 about 50 million Americans had no health coverage.[3] However, about 60% of those found to have medical debt were insured.[6] Health insurance plans rarely cover all health-related expenses; for insured people, the gap between insurance coverage and the affordability of health care manifests as medical debt. As with any type of debt, medical debt can lead to an array of personal and financial problems—including having to go without food and heat plus a reluctance to seek further medical treatment.[6][8] Aggressive debt collecting has been highlighted as an aggravating factor.[9] A study has found about 63% of adults with medical debt avoided further medical treatment, compared with only 19% of adults who had no such debt.[10]

In the United States, one of the largest concerns of medical debt stems from high medical costs.[11][12] For example, in a 2011 study of fees paid to physicians for office visits and hip replacement procedures across the United States and several other wealthy countries, the patients in the United States paid 27% more for office visits and 70% more for hip replacement procedures.[12] Similarly, the United States charges an average of $75,345 for a heart bypass operation whereas the same operation in other wealthy countries, such as the Netherlands and Switzerland, costs $15,000 to $36,000 on average.[13] In general, data has shown that individuals in the United States pay nearly double the amount of money on healthcare in their lifetime than those in other wealthy countries.[14] As these healthcare costs continue to rise, a lack of insurance or insurance that does not cover all fees causes a rise in out-of-pocket expenses.[15] In addition, those with medical debts may increase in the future due to increasing patient cost-sharing and rising health care costs.[16]

According to a study conducted in 2012 by Demos, it was determined that among indebted households 62% cited out-of-pocket medical expenses as a contribution to their debt.[17] As these medical fees continue to rise and out-of-pocket expenses continue to grow, Americans are at much higher risk of falling into medical debt whether insured or not.[18]

In May 2023, President Biden publicly discouraged all Americans from using medical credit cards to pay for their medical bills due to the credit cards' high interest rates.[19]

The threat of unmanageable medical debts is less common for those in Western Europe, Japan and Australia. A 2019 study of health provision carried out for the Los Angeles Times reported in the United Kingdom, Sweden, France, Germany and Japan about 2.8% of citizens struggled with high medical bills compared to about 16.6% of Americans.[20] In the same year, a World Health Organization analysis of the spending of patients in 36 countries found that only 1 household in 90 in the Netherlands risked facing prohibitive medical expenses.[21] According to another report by the Los Angeles Times, countries such as the United Kingdom and Canada that have state-funded health provision, and Germany and the Netherlands where private insurers have tight limits on the amount of patients may be charged, few people struggle to afford medical expenses. Research based on available data from 2018 indicated that the amount of unaffordable health care by individuals in the USA (7.4%) was considerably higher than European states such as France where only 1.9% of people faced concerns regarding medical bills, Germany (2.4%), the UK (1.4%), the Netherlands (1.1%), and non-European countries such as Australia (3.2%) and Japan (2.6%). The study found that although health care expenses are cheaper in other countries in comparison with the US, such countries faced difficulties such as overcrowding in UK hospitals and long waiting lists in Canada.[22]

Medical debt is considered as a non-priority unsecured debt in Chapter 7 bankruptcy. In other words, medical debts are paid only after assets are applied to the debt of creditors who hold priority debt, and thus medical debts are often discharged in their entirety at the conclusion of the bankruptcy process. If the bankrupt estate has sufficient assets such that a part of the medical debt is repaid through bankruptcy, any remaining outstanding medical debt that is included in the bankruptcy case will be discharged.

Wikimedia Commons has media related to Private medical debt statistics.

• Charge description master
• Financial toxicity
• Health care in the United States
• Health economics
• Health insurance
• Underinsured

• Lucas Phillips (October 25, 2020), "New England churches buy up, forgive $26.2 million in medical debt", Boston Globe, US